26 Apr 2017
SUPERMARKETS are making super yields for commercial property investors as another hits the market in the Geelong region.
This time the freehold for the IGA supermarket at St Leonards is being offered at auction next month.
The property, which includes a cafe, separate liquor department and 42 at-grade car parks, provides more than $286,000 in annual rents and the security of a long-term lease.
Darcy Jarman, Geelong West agent Simon Jarman said the supermarket had recently inked a new long-term lease.
“Given the new 15-year lease to 2032, with options to 2052 to IGA, the property makes an exceptional investment in a location on the Bellarine Peninsula that is forecast for high population growth,” Mr Jarman said.
The modern retail complex is also set to offer the buyers substantial depreciation allowances, given it’s just five years old, he said.
Mr Jarman said the property was expected to turn a 5.5 per cent yield, putting price expectations in teh $5 million range.
He said high net-worth private investors, including private superannuation funds, were expected to be in the mix for the property.
“The tenants have been trading there since 2012 and have had exceptional growth in their turnover since occupation,” Mr Jarman said.
“It is well supported by the community”.
The complex is 100m from The Esplanade in St Leonard’s main retail strip.
The freestanding supermarket has a total lettable area of 1293sq m, including the liquor department.
While the supermarket lease returns of $270,000 a year plus GST, a separate two-year lease, with three two-year options for the cafe, is returning more than $16,000 a year, plus GST.
It’s the second freestanding supermarket to hit the market in the region in past months, with Highton’s Woolworths complex set to be auctioned on Thursday.
It also follows the sale of two supermarket complexes in Geelong West last year.
Coles’ Shannon Ave supermarket sold for $18.1 million in October 2016, for a 4.95 per cent yield, while Charter Hall sold the Pakington Strand Shopping Centre, anchored by Woolworths, for $31.8 million last September – for a 4.97 per cent yield.